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5

No, the Roth IRA income limit for contributions is based on current year MAGI. The previous year's MAGI has no impact.


4

For example, what happens if I buy 10k in stock with personal income, and the stock goes down 5k, and I withdraw 10K. Will the extra 5K I withdraw be taxed or not? You can't withdraw money you don't have, if the value your 10k investment is cut in half the most you could withdraw is 5k. In a Roth IRA you contribute post-tax dollars and can therefore ...


1

At $200k/year income you're not deferring taxes! With the 401(k) and your income, you are not eligible to deduct your contribution to a traditional IRA. What you are actually creating is a Non-Deductible IRA (NDIRA). That's not a third kind of IRA, merely a treatment of a traditional IRA. You will not be taxed twice. You won't owe more tax on the amount of ...


0

You are right, there are a number of reasons why someone would keep money out of retirement accounts in general. If you think you'll need the money before 59 1/2, it's a bad idea to sock it away in an account that will charge a penalty to get it out before then. You might need it for living expenses for an unexpected job loss or health emergency. You might ...


2

Depending on your age and investment style, you are very likely to achieve financial independence well before normal retirement age by maxing contributions. One pitfall to such a plan is to take money out of your retirement accounts to use for other purposes. You don't sound like such a person, but it is important to realize. So in my opinion you should ...


1

I am in the United States and I earn an income in the range of $200k/year. I am single with no kids and generally keep my overhead expenses low (car is paid off, my housing cost is very reasonable, etc.). For retirement, I max out my 401k to the IRS limit and my employer does matching. My income allows me to have extra funds to invest and I realize that the ...


8

Here's what you're missing: In a "standard brokerage account", in addition to having already paid income tax on the money you invest, you pay tax on the growth of the investments (dividends when you receive them and capital gains when you sell). The additional tax on growth is what IRAs avoid. Now, you might have read (correctly) that in your case, ...


22

At your income level you can't make deductible contributions to a traditional IRA and you can't contribute directly to a Roth IRA, but you can make a backdoor Roth contribution. In a Roth IRA your gains grow tax-free and you don't pay tax on distributions (because the contributions were made with money that was already taxed). Also you can withdraw your ...


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